In the viral “Hastily Made Cleveland Tourism Videos” of the Great Recession era, comedian Mike Polk provided a panorama of his faded hometown. The scenes were of “crippling depression,” the opportunity to “buy a house for the price of a VCR VCR
,” urban redevelopment looking like “a Scooby-Doo ghost town,” and the downtown perches where one could watch “poor people all wait for buses.” Hey but “at least we’re not Detroit!”
Ohio like Michigan adopted a state income tax about fifty years ago, in 1971. In so doing it sealed its fate as a charter member of the Rust Belt. As I’ve been writing lately, the states that in the 1960s and the 1970s added an income tax, including every one from New Jersey across to Illinois, turned out to be precisely coextensive with the Rust Belt that emerged and settled in for good in the 1980s.
Cleveland’s claim as the forge of the American industrial revolution is as strong as anybody’s. Rockefeller’s decision to locate in that city during the civil war sealed its fate. The founding of Standard Oil in Cleveland in 1870 comprehensively transformed the American economy for good. Here was a business that would redefine quality control, customer service, and the practice of management, let alone the accumulation and deployment of profits, creating a new level of ambition of what companies could aspire to as enterprises useful to the public. The immense economic-growth decade of the 1880s saw phenomenal expression in Cleveland, which among other innovations pioneered swell living in the suburbs.
Old timers from Cleveland recall that as of the 1940s, the arc swinging from Buffalo around through Cleveland, including Pittsburgh, Detroit, and Chicago as well, accounted for a wildly disproportionate share of world economic production. The geographic center was Cleveland.
As of the early 1930s, Ohio had neither a sales nor an income tax. After local property taxes clocked property owners in the early years of the Great Depression, Ohio adopted a sales tax in 1933. Miami University tax professor George W. Thatcher contemplated his Ohio as of 1952 with these words:
“A study of the expenditures of the state of Ohio shows a rapid increase since 1931. Total state expenditures….amounted to a rate of increase for the state of Ohio from 1931 to 1950 [of] 669 percent while for the nation as a whole the rate of increase was only 426 percent. The per capita expenditures of the state of Ohio increased 642 percent from 1931 to 1950 while for the United States the increase was only 440 percent….The state, since 1932, has assumed greater responsibility for welfare….Again, there was increased financial participation by the state in public education and highways.”
1880s, huge private wealth creation inclusive of mass public services and amenities; mid-twentieth century, creeping state takeovers of all sorts of functions including—touché Rockefeller—transportation.
In 1952, as the worthy Thatcher reported these data, Ohio had barely contemplated the fiscal implications of the baby boom. The voters would let officials know how they felt. In a remarkable essay in a recent issue of the Journal of Policy History, Josh Mound has tallied the collapse of public support for school-bond issues in Ohio—particularly in the smokestack city of Youngstown—in the 1950s and 1960s. We call on Mound’s work in our new book on the history of the income tax, Taxes Have Consequences.
Place after place in Ohio in the post-World War II era tried to raise their property tax rates. The rates. Huge post-1945 economic growth raised the value of property immensely. Taxed at the same rate, there would have been (there was) a harvest of new revenue for governments. Ohio tried again and again in the 1950s and 1960s to raise property tax rates.
The failures became so epic—they chuckled about it on national TV, on Laugh-In—that new Ohio governor John Gilligan pushed through a state income tax in 1971. He was a one-termer, ushered out of office in the vicious stagflation recession of 1975. In New Jersey, “One-Term Byrne” Brendan Byrne was supposed to meet the same fate after he started an income tax in 1976. Somehow he got re-elected.
The point of Ohio’s income tax, like Pennsylvania’s of the same year, was to cover expansive education spending from pre-K all the way through college. Kent State was going to get a facelift. The problem is that you need young people for such plans. Since 1971, Ohio has lost badly in its share of national population and national income. I offered Michigan’s horrendous statistics on this score last week. Ohio’s are only a little better—see the chart in Taxes Have Consequences.
The top rate of Ohio’s income tax started out at 3.5 percent. Within ten years it was 9.5 percent. Over the last dozen years, the top rate has come down by a third, from 6 to 4 percent. Ohio has miles to go before it thrives.
Columbus is supposed to be the up-and-coming Ohio city, the tech hub and incubator of the future. How did they get Intel INTC
to commit there recently? Tax abatements (plus visions of a federal subsidy). Have a burdensome tax rate, and the exemption from it becomes valuable. Intel’s stock has not moved in this millennium. This is the kind of outfit ready to do business in Ohio. In Rockefeller’s day, the place attracted visionaries before they started something.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
OTTAWA – Statistics Canada says the country’s merchandise trade deficit narrowed to $1.3 billion in September as imports fell more than exports.
The result compared with a revised deficit of $1.5 billion for August. The initial estimate for August released last month had shown a deficit of $1.1 billion.
Statistics Canada says the results for September came as total exports edged down 0.1 per cent to $63.9 billion.
Exports of metal and non-metallic mineral products fell 5.4 per cent as exports of unwrought gold, silver, and platinum group metals, and their alloys, decreased 15.4 per cent. Exports of energy products dropped 2.6 per cent as lower prices weighed on crude oil exports.
Meanwhile, imports for September fell 0.4 per cent to $65.1 billion as imports of metal and non-metallic mineral products dropped 12.7 per cent.
In volume terms, total exports rose 1.4 per cent in September while total imports were essentially unchanged in September.
This report by The Canadian Press was first published Nov. 5, 2024.
